ex10-1.htm


     

    
      

      

    

    
      ETHOS
ENVIRONMENTAL, INC.

      


      SECURITIES PURCHASE
AGREEMENT

      


      This
Securities Purchase Agreement (the “Agreement”) is made
as of August 1, 2008, by and between Ethos Environmental, Inc., a Nevada
corporation (the “Company”) and MKM
Opportunity Master Fund Limited, a Cayman Island corporation
(“Purchaser”).

       

      RECITALS

      


      Subject
to the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and
Rule 506 promulgated thereunder, the Company desires to issue and sell to
Purchaser, and Purchaser desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.

       

      AGREEMENT

      


      In
consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:

       

      1.           Purchase
and Sale of Securities.

       

      (a)           Sale and
Issuance of Securities. Subject to the terms and
conditions of this Agreement and the exhibits attached hereto, Purchaser agrees
to purchase at the Closing (as defined below), and upon payment of the Purchase
Price (as defined below) the Company agrees to sell and issue to Purchaser, the
following securities (the “Securities”):

       

      (i)           a
convertible promissory note in the amount of $300,000.00, in the form attached
to this Agreement as Exhibit A (the “Note”);
and,

       

      (ii)           a
common stock purchase warrant for 1,000,000 shares of the Company’s Common
Stock, in the form attached to this Agreement as  Exhibit B (the “Warrant”).

       

      (b)           Payment
of Purchase Price.  Payment of the
Purchase Price must be transmitted via bank wire to the Company as follows
to:

      


      Bank of
America

      7680
Girard Avenue

      La Jolla,
CA 92037

      Tel.
(858) 452-8400

      


      Routing
Number: 0260-0959-3

      


      SWIFT
NUMBER:  BOFAUS6S

      


      ACCOUNT
INFORMATION:

      


      SteadyLaw
Group, LLP

      501 W.
Broadway, Suite 800

      San
Diego, CA 92101

      Tel.
(619) 399-3102

      Fax.
(619) 330-1888

      


      ATTORNEY
CLIENT TRUST ACCOUNT

      Account
No. 16648-41027

      


      
        
           

        

        
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       (c)           Closing;
Delivery.

       

      (i)           The purchase and sale of the
Securities shall take place at the offices of the Company at such time and place
as the Company and the Purchaser mutually agree upon in writing (which time and
place are designated as the “Closing”).

       

      (ii)           At
the Closing, the Company shall deliver to the Purchaser the Note and Warrant to
be purchased by such Purchaser against (1) payment of the Purchase Price
therefor by wire transfer to the Company set forth above, and (2) delivery of
counterpart signature pages to this Agreement.

       

      2.           [This Section 2 is
intentionally left blank]

       

      3.           Representations
and Warranties of the Company.  The Company
hereby represents and warrants to Purchaser that:

       

      (a)           Organization,
Good Standing and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.

       

      (b)           Authorization.  All corporate
action on the part of the Company, its officers and directors necessary for the
authorization, execution and delivery of this Agreement and the authorization,
sale, issuance and delivery of the Securities, the shares of the Company’s
capital stock issuable on conversion and/or exercise thereof, and the
performance of all obligations of the Company hereunder and thereunder has been
taken or will be taken prior to the Closing. The Agreement and the
Note and Warrant, when executed and delivered by the Company, shall constitute
valid and legally binding obligations of the Company, enforceable against the
Company in accordance with their respective terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating to the availability
of specific performance, injunctive relief, or other equitable
remedies.

       

      (c)           Capitalization.  The authorized
capital of the Company consists of:

       

      (i)           100,000,000
shares of Common Stock, $0.0001 par value of which (excluding the Securities
sold hereunder or pursuant to the Stock Purchase Agreement of even date herewith
by and between the Company and the Purchaser (hereinafter, the “Stock Purchase
Agreement”)) 39,520,174 shares of common stock are issued and outstanding and no
shares of preferred stock are issued and outstanding. All of the outstanding
shares of Common Stock have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws.

       

      (ii) The
shares of common stock to be issued by the Company upon conversion of the Notes,
shall be issued from the shares currently being reserved by the Company for
delivery to the Company’s executives officers as earn out shares.

       

      (iii) All
shares of the Company’s common stock issuable upon the exercise of the Warrant
or conversion of the Note shall, upon issuance, be duly duly and validly
authorized and issued, fully paid and nonassessable.

       

      (d) Enforceability.  The
execution and delivery by Company of this Agreement, the issuance of the
Securities and the shares of common stock issuable upon the exercise and/or
conversion of the Securities, will result in legally binding obligations that
are enforceable against the Company in accordance with the respective terms and
provisions of the Agreement, the Note and the Warrant.

       

      
        
           

        

        
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      (e) Additional
Representations and Warranties. The Company hereby adopts
and incorporates by reference the representations and warranties of the Company
set forth in Article III of the Stock Purchase Agreement as though such
representations and warranties are expressly set forth at full
herein.

       

      4.           Representations
and Warranties of the Purchaser.  Purchaser hereby
represents and warrants to the Company that:

       

      (a)           Authorization. Purchaser has full power and
authority to enter into this Agreement.  This Agreement when executed
and delivered by the Purchaser, will constitute valid and legally binding
obligations of the Purchaser, enforceable in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors’ rights generally, and as limited by laws relating to
the availability of a specific performance, injunctive relief, or other
equitable remedies.

       

      (b)           Purchase
Entirely for Own Account.  This Agreement is
made with the Purchaser in reliance upon the Purchaser’s representation to the
Company, which by the Purchaser’s execution of this Agreement, the Purchaser
hereby confirms, that the Securities to be acquired by the Purchaser will be
acquired for investment for the Purchaser’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same.  By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to the Securities. The Purchaser has not been formed for
the specific purpose of acquiring any of the Securities.

       

      (c)           Knowledge. Purchaser acknowledges that
he has had access to the Company’s filings with the Securities and Exchange
Commission and has reviewed in particular the risk factors for investors
contained in those filings. Purchaser further acknowledges that the Company has
continued to sustain operating losses since the last financial statements filed.
The Purchaser is aware of the Company’s business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities.

       

      (d)           Restricted
Securities.  The Purchaser
understands that the Securities (and the shares of common stock issuable upon
the exercise and/or conversion thereof) have not been registered under the
Securities Act. Unless registered, the Purchaser may only sell or transfer the
Securities (and the shares of common stock issuable upon the exercise and/or
conversion thereof) pursuant to a specific exemption from the registration
provisions of the Securities Act.  The Purchaser understands that the
Securities are “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Purchaser must hold the
Securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available.  The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser’s
control, and which the Company is under no obligation and may not be able to
satisfy.

       

      (e)           [This
Section 4(e) is intentionally left blank]

       

      (f)           Legends.  The Purchaser
understands that the Securities, and any shares of common stock issuable upon
the exercise and/or conversion thereof may bear one or all of the following
legends:

       

      
        	
                (i)  

              	
                A
      legend substantially similar to the following
  form:

              


      

       

       “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO
SUCH SALE OR DISTRIBUTION MAY BE AFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.”

       

      
        
           

        

        
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      (ii)           Any
legend required by the Blue Sky laws of any state to the extent such laws are
applicable to the shares represented by the certificate so
legended.

       

      (g)           Accredited
Investor. The
Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.

       

      5.           Conditions
of the Purchasers’ Obligations at Closing.  The obligations
of Purchaser to the Company under this Agreement are subject to the fulfillment,
on or before the Closing, of each of the following conditions, unless otherwise
waived:

       

      (a)             Representations
and Warranties.  The
representations and warranties of the Company contained and incorporated by
reference in Section 3 shall be true on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
the date of the Closing.

       

      (b)             Qualifications.  All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be obtained and effective as of the Closing.

       

      6.           Conditions
of the Company’s Obligations at Closing.  The obligations
of the Company to Purchaser under this Agreement are subject to the fulfillment,
on or before the Closing, of each of the following conditions, unless otherwise
waived:

       

      (a)           Representations
and Warranties.
The representations and warranties of Purchaser contained in Section 4
shall be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the
Closing.

       

      (b)           Qualifications.  All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be obtained and effective as of the Closing.

       

      7.           Miscellaneous.

       

      (a)           Successors
and Assigns.  The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties.  Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

       

      (b)           Governing
Law.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflicts of laws principles
that would result in the application of the substantive laws of another
jurisdiction. Any action brought by any party against the others
concerning the transactions contemplated by this Agreement shall be brought only
in the state or federal courts located in the County of New York, State of New
York. All parties agree to submit to the jurisdiction of such courts. The
prevailing party or parties shall be entitled to recover from the losing party
or parties its reasonable attorney’s fees and costs. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law.  Any such provision which may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision of this Agreement.  Nothing
contained herein shall be deemed or operate to preclude either party hereto from
bringing suit or taking other legal action against the other in any other
jurisdiction to enforce a judgment of any court located in New York County, City
and State of New York, in favor of the prevailing party.

       

      
        
           

        

        
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      (c)           Counterparts.  This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.

       

      (d)           Titles
and Subtitles.  The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

       

      (e) Notices.   All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be: (i) if to the Company: 6800 Gateway
Park Drive, San Diego, Ca 92154, Fax: 619.575.9300, with a copy to Luis
Carrillo, Esq., SteadyLaw Group, LLP, 501 W. Broadway Suite 800, San Diego, CA
92101 (ii) if to the Purchaser:  MKM Opportunity Master Fund, Limited,
644 Broadway, Fourth Floor, New York, New York 10012, facsimile , with a copy to
Charles J. Hecht, Esq., Hecht & Associates, P.C., 275 Madison Avenue, 28th
Floor, New York, New York 10016, facsimile: (212) 490-3263, e-mail:
..

      


      (f)           Amendments
and Waivers.  No provision of
this Agreement or the Note or Warrant may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and the
Purchaser, or in the case of a waiver, by the party against whom enforcement of
any such waiver is sought.  No waiver of any provision shall be deemed
to be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right.

       

      (g)           Severability.  If one or more
provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good
faith, in order to maintain the economic position enjoyed by each party as close
as possible to that under the provision rendered unenforceable.  In
the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded
from this Agreement, (ii) the balance of the Agreement shall be interpreted
as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.

       

      (h)           Entire
Agreement.  This Agreement,
the documents referred to herein, the provisions incorporated herein by
reference and the documents annexed as exhibits hereto constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly canceled.

       

      (i)           Corporate
Securities Law.  THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS
THE SALE IS SO EXEMPT.

       

      IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

       

      
        
           

        

        
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      COMPANY:                                                                                  PURCHASER:

      


      
        	
                 
      

              	
                ETHOS
      ENVIRONMENTAL, INC.

              	
                MKM
      OPPORTUNITY MASTER FUND, LIMITED

              


      

      


      


      


       

      
        	By:	 	 By:	 	 
	 	Enrique de Vilmorin,
      President  	 Its	 	 
	 	 	 	 	 



      



      
        
           


        

        
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